Korean micromobility startup Swing grabs $24M for growth, expands into Japan – TechCrunch


Swing, a South Korean electric scooter and micromobility startup, today announced it has raised $24 million in a Series B funding round to drive its growth and expansion in Japan.

The funding was led by White Star Capital, which also invested in Berlin-based Tier Mobility and included existing backer Hashed, among others. With the new capital, Swing has raised a total of around $33 million (KRW 40 billion) since its inception in 2019.

Swing founder and CEO San Kim told TechCrunch that the startup will use the proceeds to grow its micromobility fleet and further penetrate the Japanese market. In 2022, Swing plans to deploy 100,000 e-scooters, e-bikes and e-mopeds that will have an interchangeable and replaceable battery and install 200 charging stations for its own use and others as options. Swing currently operates a fleet of 35,000 electric vehicles, including electric scooters and electric mopeds.

Along with its Swing app, the shared micromobility startup recently launched a new app called Dayrider that allows delivery people to rent mopeds or electric scooters for just one or two days without having to recharge.

The city of Seoul announced in September that it will add 62,000 electric motorcycles, including electric mopeds, and install an additional 200,000 electric charging stations by 2025 in a bid to reduce greenhouse gas emissions. Seoul also said it would replace 100% of the 35,000 motorcycles used for delivery services with electric motors.

Swing aims to conquer the market. According to the company, there is no suitable moped model that can meet the required demand in South Korea, no supply chain that can sell, repair or resell, and no charging station that offers services to potential moped users.

In terms of operations, Swing has adopted a franchise model. Swing COO Jason Shin said Swing, with the franchise model, could expand its fleets faster with smaller capital than its peers. Swing sells its branded fleets to franchisees. Then the franchisees charge and maintain the electric scooters using Swing’s proprietary software. Swing currently has more than 50 franchise partners, Kim said.

“No one doubted the potential of the market. The problem was who would win the competition. Rather than pouring investors’ money into the field, our strategy was to build a strong internal operations team to ensure that each scooter generates a positive return, which has worked,” Shin said.

Although Swing has generated net profits since its second year of operation, it has not been able to meet its targets as expected, Kim said. He added that ridership from new riders plummeted following last year’s tightened regulations on electric scooters.

South Korea’s revised e-scooter rules have hurt the country’s e-scooter companies. Under the amended Road Traffic Act, which came into effect in May 2021, riders of electric scooters must be aged 16 or over, hold a valid driver’s license and wear a helmet. If users do not comply with the new regulations, they will be fined. Electric scooter users should also use bike lanes and park electric scooters away from people and cars. In July, the city of Seoul announced that it would tow illegally parked electric scooters and charge a fine.

More than 20 electric scooter rental companies currently operate in South Korea, where there is no limit to the number of fleets or companies that can handle business in the sector. Industry sources tell TechCrunch that consolidation started in the electric scooter industry last year. Berlin-based electric scooter platform Wind Mobility, which entered the South Korean market two years ago, closed in Seoul last October.

Expansion in Japan

Last year, the startup created a subsidiary in Japan, with the aim of launching its service in Tokyo in the first half of 2022.

Kim said Japan’s customers and cities are optimal for e-scooters, with its high smartphone penetration, e-bike usage and huge demand for the last mile ride due to the distance between the stations.

“Last year, the Japanese government opened the door to legal start-up of electric scooter sharing through proof of concept. As a Seoul-based startup, Swing can lead the adoption of micromobility in Japan through our operational excellence and data accumulated in a very similar environment,” said Kim.

“We are at an exciting time with electric scooters in the Japanese market, where the government is conducting proof-of-concept projects to refine its guidelines and regulations ahead of a full launch. This exciting partnership between White Star Capital and Swing will be extremely beneficial to Japanese stakeholders who would have access to Swing’s technological capabilities as well as the operational knowledge they have acquired over the years in Korea. Last mile logistics remains a challenge in Japan, and we look forward to helping Swing address these issues and provide a better mobility experience for users, passengers, businesses and public sector counterparts,” said Shun. Nagao, partner of White Star Capital. noted.

“Mobility has been a big priority for us as we have been fortunate to partner with leading companies such as Tier Mobility and Finn Auto in Europe. Strong guidelines and regulations developed in close partnership with leading companies are setting the stage for Europe to embrace tech-native mobility and its positive environmental impact. We see South Korea and Japan following this trend closely and expect micromobility to reach a critical inflection point in the coming years,” said Eddie Lee, Partner at White Star Capital. “White Star Capital will work closely with San and his team to support Swing’s ambitious vision of becoming a global company by entering Japan and expanding its logistics capabilities with the new Dayrider business.”

Swing has more than 100 employees in South Korea and four people in Japan.

Tech

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